Insurance boom to beat oncoming weather

Insurance boom to beat oncoming weather | Insurance Business Australia

Insurance boom to beat oncoming weather
Multi-peril crop insurance (MPCI) is expected to take a big increase in sales in the coming month as drought conditions brought on by El Nino threaten Australian crops.

Following the first payout to an Australian farmer with MPCI cover earlier this year, insurer Latevo International expects to take on more clients this season.

With only 29 farmers nationwide taking up the offering last year, Latevo chief executive Andrew Trotter believes the coverage is in line for a higher uptake over the coming years in order to achieve sustainability.

"We'd like to see that we're insuring well over 100 clients this year, the real aim and you get really good balance in multi-peril program is when you get 250 to 300 farmers and that's where we want to get to over the program so it does stand on its own two feet," Trotter told the ABC.

“It’s a brand new concept to Australia and like any new technology; it’s a big job getting that message out to people. Our aim is to try and inform farmers as accurately as we can about how the program works and how they can be involved.”

According to reports in The Land, Latevo is looking at insuring some 3000 farmers by 2016 as Allianz and CelsiusPro are also entering the market.

Latevo have run a series of workshops throughout South Australia to try to reach farmers with the information they need before the El Nino drought cycle that sits on the horizon.

“We had some really good interest at our workshops, obviously we’d like to see more people but like any new product you start small and as word spreads more and more people come along. You can’t expect people to open the floodgates on a brand new concept,” Trotter continued.

"The biggest fear from farmers is it seems too good to be true – how can an MPCI product work without government assistance? And that’s the biggest thing that we need to alleviate for farmers.”

With premimums on average of $21 per hectare insured, some are calling the MPCI cover an unneeded expense but Trotter compared it to income protection insurance for wage earners.

“By running the program last year in a pilot sense, we are able to demonstrate to people that the reason this works is that the risk is insured with global insurers so they can feel comfort that if we have a really devastating season in Australia, the program has got the funds behind it to ensure that farmers are always paid out.”